Supplier Licensing Review – stakeholder workshop Housekeeping | Time | Agenda Item | |--------------|-----------------------------------------------------------------------------| | 10 – 10.30 | • Introduction\
• Problem we are aiming to solve\
• Aims of the day | | 10.30 – 11.05| **Table discussion**: Theories of harm (problem/risks identification) | | 11.05-11.20 | **Facilitator Feedback** | | | *Tea & Coffee 11.20 – 11.35* | | 11.45 – 12.00| **Introduction to policy options** | | 12.00-12.30 | Q&A | | 12.30-13.00 | **Live poll**: Participants to decide which of our options they feel is proportionate against the SLR objectives | | | *Lunch 13.00-13.50 (feedback/comment boards)* | | 13.50 – 15.00| **Table discussion**: Participants to reflect on live poll results | | 15.00 – 15.30| **Design your own solution**: Stakeholders to design a solution of what they think is best reform package for SLR. | | 15.30 - 16.00| **Closing remarks/summary** |

1. To encourage discussion that ensures our work packages are focused on the right areas to achieve the principles of Supplier Licensing Review.

2. Clarify questions and hear your views on the various options we are considering for our ongoing and exit packages.

3. Your opportunity to feed in your views to help inform our current thinking on the way forward for the Supplier Licensing Review. Issues we’ve seen in the market

• Supplier failures that have led to increased costs to consumers

• Poor customer service

• Practical challenges in moving customers during a SoLR Structure of Supply Licensing Review

Supply Licensing Review - Core Principles

1. Suppliers should adopt effective risk management and be adequately prepared and resourced for growth, and bear an appropriate share of their own risk
2. Suppliers should maintain the capacity and capability to deliver a quality service to their customers, and foster an open/constructive dialogue with Ofgem
3. We maintain proportionate oversight of suppliers, and effective protections for consumers exist in the event of failure
4. Our licensing regime facilitates effective competition and enables innovation

Market Entry Comes into effect Summer 2019

Ongoing requirements Consult in Q3/Q4 2019

Exit arrangements Consult in Q3/Q4 2019

Resources New requirement to demonstrate appropriate knowledge, funding, awareness of risks & necessary capabilities

Readiness to comply with obligations New requirement to demonstrate awareness of key regulatory obligations & how the supplier intends to comply

‘Fit and proper’ test More robust assessment of whether persons with significant management responsibility, directors, shareholders or influence are fit and proper to hold a licence

Promoting more responsible risk management Would require higher standards from suppliers relating to managing risk and growth

More responsible governance and increased accountability Would look to incentivise and promote good conduct from those in senior management and other positions of influence

Improved market oversight Would enhance Ofgem’s oversight of the market and promote better standards via new reporting requirements

Improving efficiency and competitiveness of the SoLR process Would review the process for managing supplier failure and appointing a SoLR

Improving the mechanisms to recover costs Would look to improve the experiences for customers of a failing supplier

Improving the SoLR experience for consumers Aims to review the recovery mechanisms for SoLR related costs Questions for table discussions

• Does our ‘theories of harm’ diagram reflect your understanding of the issues the Supplier Licensing Review is trying to address?

• What parts of the current regulatory arrangements are not acting as effective mitigations for the issues we are seeing?

• What do you think are the most pressing issues to be resolved?

• In which ‘stages’ of the flow diagram should remedies be focused (ie supplier behaviours, business impacts, market impacts) Introduction to policy options These options would require higher standards from suppliers relating to managing risk and growth.

This package would look to incentivise and promote good conduct from those in senior management positions and other positions of influence.

These options would enhance Ofgem’s oversight of the market and promote better standards by introducing new reporting requirements.

This work package would review the process for managing supplier failure and appointing a SoLR.

This work package aims to review the recovery mechanism for SoLR related costs.

This work package would look to improve the experiences for customers of a failing supplier.

1. Promoting more responsible risk management
2. More responsible governance and increased accountability
3. Improved market oversight
4. Improving efficiency and competitiveness of the SoLR process
5. Improving the mechanisms to recover costs
6. Improving the SoLR experience for consumers Importance of recognising interactions between different options

...this option.

| | 1 | 2 | 3 | 4 | 5 | 6 | |---|---|---|---|---|---|---| | a | b | c | a | b | c | a | b | c | d | e | a | b | c | d |

This option...

...could benefit from implementation of... ...may be dependent on delivery of... ...could reduce the need (to some extent) for... Developing a work programme to take forward

- Asking for views from stakeholders on a long list of potential options
- Prioritise a package of options to take forward
- Consult on and implement specific policy options Q&A

1. What are your top 3 priorities for Ofgem to deliver?

2. What are the top 3 options you consider would deliver the most benefits if achieved?

3. What are the top 3 options you consider to be easy wins? What is the optimum package of options you’d want from the Supply Licence Review? Our core purpose is to ensure that all consumers can get good value and service from the energy market. In support of this we favour market solutions where practical, incentive regulation for monopolies and an approach that seeks to enable innovation and beneficial change whilst protecting consumers.

We will ensure that Ofgem will operate as an efficient organisation, driven by skilled and empowered staff, that will act quickly, predictably and effectively in the consumer interest, based on independent and transparent insight into consumers’ experiences and the operation of energy systems and markets.